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Banking Environment Initiative Sustainable Shipment Letter of Credit shortlisted for Financial Times Award

last modified Apr 30, 2015 12:19 PM
28 April 2015 – Trade finance product shortlisted in the finance category of the FT’s Transformational Business Awards.

A ground-breaking trade finance product developed by members of the University of Cambridge Institute for Sustainability Leadership (CISL)'s Banking Environment Initiative (BEI) to incentivise the sustainable agricultural production of soft commodities such as palm oil has been shortlisted in the finance category of the FT’s Transformational Business Awards. 

The Sustainable Shipment Letter of Credit is a means by which banks can verify that shipments of soft commodities have been produced in line with internationally recognised sustainability standards and therefore incentivise the trade of such commodities.

The model was developed by members of the BEI in partnership with the Consumer Goods Forum, and is backed by the International Finance Corporation (IFC).

As a result of the IFC’s support, banks’ cost of capital for the trade of eligible commodities is reduced, specifically for commodities being imported by buyers in emerging markets. These savings can potentially be passed on by banks to those buyers, helping to reduce the cost of sustainably produced commodities in markets that are particularly price-sensitive. 

Initially developed for palm oil trading and linked with the globally verifiable Roundtable on Sustainable Palm Oil (RSPO) sustainability standard, the BEI’s Sustainable Trade Finance Council will now be exploring how the sustainable shipment model can be expanded to encompass other key soft commodities such as soy, beef and timber. 

The award winners will be announced at the FT/ IFC Transformational Business Awards dinner, which will take place in London on 11 June.

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Andrew Voysey

Director, Finance Sector